Analysis: Intel buys McAfee for $7.7 billion

Monday - 8/23/2010, 4:09pm EDT

Jill Aitoro, senior reporter, NextGov

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Intel seems to be making a push to create more than just computer chips.

As Federal News Radio told you, the company just bought McAfee for $7.7 billion.

The all-cash deal is the biggest acquisition in Intel's history, but some are wondering about the impetus behind it.

Jill Aitoro is a senior reporter with NextGov and tells us it's both surprising and significant.

"Intel is trying to position themselves as a security player more than perhaps folks thought them to be in the past. The purchase of McAfee provides that for them, and also provides them with quite a bit of cash flow, which sometimes is a little difficult to get from something like a chip manufacturer."

Many analysts have speculated that Intel might be trying to bake more security into its processors. Aitoro says this might be fairly challenging at the moment, and instead Intel might use McAfee for complimentary technology instead.

"One thing that, certainly, Intel will be able to get from McAfee over the long term is intellectual property and awareness of this threat landscape. That information can certainly impact how Intel incorporates security features. . . . But, needless to say, baking in anti-virus won't be be too directly incorporated into the development of a chip, but it can certainly contribute to how Intel continues to develop their microprocessors moving forward."

Intel will need to come to terms with a very different routes to market process. Chip vendors often take a long time during the development cycle, versus a company like McAfee, which constantly surveys the market for threats. Aitoro says, however, it's not all bad news and the deal was made for a reason.

"What some have called chip manufacturers, as well as the PC folks out there -- we've all heard them called commodity players. Now security, probably more than any other market, can truly set them apart, and I think they are recognizing that fact, particularly in the federal market where security is top of mind. So, a company like Intel, who already has an enormous market share in the federal space, can incorporate security features into their chip technology, but also broaden their portfolio of what they offer in terms of security and get themselves a bit more noticed."

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Email the author of this post at dramienski@federalnewsradio.com